Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The Department of Transportation (D0T) advertised for bids on State Project Number 97879-3336 in July of 1986. The project involves new roadway construction with specified materials, drainage installation, curbs, gutters and sidewalks adjacent to the Orange Bowl in Dade County. The D0T set a disadvantaged business enterprise (DBE) participation goal for this project of fifteen percent. In order to comply with this goal, a bidder must state its intention to subcontract with a D0T certified DBE an amount of work equal to or greater than fifteen percent of the total dollar value of its bid. The D0T opened the nine bids received for this project on July 30, 1986. The intervenor Capeletti Brothers, Inc. (Capeletti), submitted the apparent low bid in the amount of $2,044,000.18, and the petitioner Russell, Inc. (Russell), submitted the apparent second low bid of $2,047,503.00 The remaining bids ranged between $2,124,527.32 and $2,851,657.26. Bidders indicate compliance with the minority participation goals established for a project through the submittal of "DBE/WBE Utilization Form No. 1," which is submitted with the bid. In this case, Capeletti provided information on Form No. 1 that it would subcontract with Ivory Modernized Services to do "trucking" and "aggregates" at a dollar amount of $307,622.00, or 15.05 percent of the total contract amount. Russell indicated on Form No. 1 that it would subcontract with Community Asphalt Corporation to do "asphalt paving" at a dollar amount of $352,151.00, or 17 percent of the total contract amount. During the bid letting process, it is the practice of the DOT to conduct a facial review of the "DBE/WBE Utilization Form No. 1" submitted with the bid to determine whether the named subcontractor is a certified DBE or WBE and whether the participation goal set for that project has been met. Prior to awarding the contract, the DOT does not make a separate investigation to determine whether a listed DBE subcontractor is actually capable of performing the work for which the bidder has indicated. Any such investigation is made at or after the time a contractor actually submits to the DOT a request for authorization to sublet, which occurs after the DOT has awarded the contract to the bidder. The DOT considers the successful bidder to be bound to pay a DBE at least the amount listed on Form No. 1 submitted with its bid. If, for some reason, the DBE listed cannot perform the work for which it has subcontracted to perform, the DOT will require the prime contractor to either pay that amount to the listed DBE or subcontract with another DBE for that work. Ivory Modernized Services, Inc. (Ivory), is a DOT certified DBE. In its application to the DOT for certification, it listed "trucking (hauling of aggregates)" as the nature of its business. The DOT requests such information on the application because it publishes a directory of certified DBEs for the use of bidders on state contracts. Prior to submitting its bid, Capeletti and Ivory agreed that if Capeletti were the successful low bidder on this project, Ivory would furnish and deliver aggregates to the job site. It was agreed that the responsibility for obtaining and delivering the aggregates to the project site would rest with Ivory. The sum of $307,622.00 was derived by estimating the quantities of the various types of aggregates needed for the project, the material cost per ton, the hauling cost per ton and the amount and charge for on-site hauling. In the past, Capeletti has directly purchased rock from mining pits in the area. While Capeletti has never before purchased fill from Ivory, Ivory has performed one D0T job where it was responsible for both the buying and hauling of aggregates. Ivory does not own any fill land, pits or fill material, does not do any active pit excavation and does not plan to stockpile aggregate materials for this project. Ivory intends to negotiate with the rock pit owner for the required amounts, types and purchase prices of the aggregates needed, pick up those aggregates from the pits and transport them to the job site. The precise methods of payment for the aggregates has not yet been determined. In order to avoid any potential markups in the price of limerock and aggregates, Russell deals directly with the rock pits in purchasing its materials. Truckers are hired separately to deliver the materials to the job site, and they do not purchase the fill. In its bid, Russell did not list a DBE trucker or hauler because the fifteen percent participation goal could not be reached with amounts expended for trucking alone. It has been the past practice and policy of the DOT to allow all material costs to be included in meeting the DBE participation goal where the DBE subcontractor assumed the actual and contractual responsibility for the provision of the materials and supplies. For example, where a DBE grasser or concrete finisher also assumes responsibility for purchasing and obtaining the sod or concrete and responsibility for supplying those materials to the project site, the costs of the sod or concrete are included in meeting the DBE participation goal. The prime purpose of limiting payments which can be included in the case of "suppliers" who perform some commercially useful function is to prevent mere brokerage or pass-through services as qualifying for full participation in meeting DBE goals. "Commercially useful functions" performed by a "supplier" can include the stockpiling and transporting of materials.
The Issue The issue for consideration in this case was whether Petitioner, F & M Concrete Company, Inc., should be recertified as a disadvantaged business enterprise, pursuant to Chapter 14-78, F.A.C.
Findings Of Fact At all times pertinent to the issues herein, Petitioner, F & M Concrete Company, Inc., was a bridge and culvert construction company doing business in the State of Florida with principal offices in Plant City. Respondent, Department of Transportation, is the state agency responsible for certifying minority and disadvantaged business enterprises for bid award purposes with the Department. Prior to February 3, 1988, the Petitioner had been certified by the Department as a minority business enterprise, (women owned). Petitioner's stock is owned as follows: Jaretha Fletcher,. 43.3% Kathleen Fletcher,. 33.0% Jennifer Fletcher Prado,......21.67%, and Vesta Thomas,. 2.0%. All of the above, with the exception of Ms. Thomas, the retired bookkeeper, are members of the Fletcher family. Kathleen is W. Eddie Fletcher's mother, Jaretha is his wife, and Jennifer Fletcher Prado, is his sister. W. Eddie Fletcher is the President of F & M Concrete Company, Inc., and Chief Operating Officer. Kathleen Fletcher is Chairman of the Board of Directors. For approximately 15 years prior to the last 2 years, the stock owned by Jaretha Fletcher was owned in joint tenancy with W. Eddie Fletcher. Approximately 2 years ago, the ownership was transferred to Jaretha Fletcher alone. There is no evidence as to the consideration for that transfer. Mr. Fletcher claims he is not his wife's heir, and will not inherit her stock should she predecease him. Kathleen Fletcher, Mr. Fletcher's mother, has had tuberculosis for many years, and is incapable of taking a substantial, active part in the business. However, she comes to the office approximately once a week, and speaks with Jaretha by phone periodically. Jaretha is employed in the corporate office in a training capacity. Jennifer Fletcher Prado works for the Hillsborough County Road Department as an inspector, and in the course of her travels about the county, periodically sees Petitioner's crews at work. Though she does not interfere with or become involved in the supervision of those crews, if she sees something that causes her to question the crew's performance, she will phone Mr. Fletcher and demand an explanation. This is the extent of her participation in the operation of the business with the exception of serving as a member of the Board of Directors. When she retires from her position with the county, because of her experience, she will be eligible to work with Petitioner corporation but would have to spend some time gaining experience in the contracting end of the business before she could assume any managerial position. On November 1, 1988, Jaretha Fletcher, as Assistant Secretary of F & M Concrete Company, Inc., submitted the corporation's application for DBE certification. The application indicates that the firm was established in September, 1956, and is engaged in the business of building bridges, concrete pavements, curbs, sea walls, storm drainage systems, and culverts. It has 35 full time employees, of whom 57% are minority, and it serves the geographical areas incorporating numerous counties in the central part of the state. The firm is 100% woman owned in that the four individuals mentioned above own 100% of the 100 shares of stock authorized and issued. The firm is managed by a President, Vice President, Assistant Secretary, and Secretary-Treasurer. W. Eddie Fletcher is President. W. Randall Fletcher is Vice President. Jaretha Fletcher is Assistant Secretary, and Dori M. Keeler is Secretary- Treasurer. The Board of Directors is made up of the three Fletcher women. W. Eddie Fletcher received a salary of $33,800.00 in 1987; W. Randall Fletcher received $28,600.00; Dori Keeler received $20,800.00; Kathleen Fletcher received $13,520.00; Jaretha Fletcher received $7,800.00, and David L. Cox, General Manager, received $28,600.00. Question 18 of the application for recertification reflects that policy making and financial decisions are made by Kathleen Fletcher as Chairman of the Board, Jaretha Fletcher, and Jennifer Prado. Management personnel are hired and fired by the Board. Hourly personnel are hired and fired by Mr. Cox and the four job foremen. At question 19 of the application, Petitioner indicates that any decision to bid on a job is made by W. Eddie Fletcher as President and Jaretha Fletcher as Assistant Secretary. Since Mrs. Fletcher is currently serving the corporation as a trainee, her contribution to the decision making process must be minimal. Job estimating is done by W. Eddie Fletcher and David Cox. Purchases of equipment are approved by the Board upon the recommendation of W. Eddie Fletcher. Supervision of field operations is accomplished by Mr. Cox. Jaretha Fletcher, as Assistant Secretary, along with Randall Fletcher, shop foreman and Vice President; W. Eddie Fletcher, President; and Dori M. Keeler, Secretary-Treasurer, all sign the payroll checks. The application was mailed to the Department by certified package delivery on November 1, 1988 and was received by it on November 2, 1988. This was 94 days before the Petitioner's then current certification expired. On December 2, 1988, the Department mailed a letter to the Petitioner requesting additional information. This was 31 days after the date of receipt of the application, which exceeds the rule period of 30 days or requesting additional information. However, Petitioner responded to the request on December 7, 1988, one day after receipt. The additional information requested by the Department was forwarded to it by Petitioner on December 21, 1988, with the exception of two forms that had to be procured from the Department of State. After all the requested information was submitted, the Department set up an onsite review of the Petitioner's operation. According to Petitioner, though the rule governing MBE certification requires that the Department conduct the on- site review within 60 days of receipt of application, it was not done in this case until the 98th day after the application was submitted. The rule also states that approval or denial must be announced within a 90 day period from application. This was not done here until March 14, 1989, when Mr. Pete Davis, DBE Certification Coordinator for the Department, notified the Petitioner by certified mail that its application had been denied. Since the application was submitted on November 1, 1988 and received on November 2, 1988, March 14, 1989 terminates a period of 132 days from the date of receipt of application. Mr. Donnie Alford, an engineer, works for the Department's construction office and is a member of the DBE Certification Committee which considered Petitioner's application. This committee, which consists of three voting members and one nonvoting member, reviewed Petitioner's file. The application was reviewed by all committee members before a vote was taken and Mr. Alford, as a voting member, considered all the information in the file including such items as gross receipts, ownership, directorship, the officers, their salaries, the ethnic status and span of control of the ownership and other personnel, and all other matters mandated for consideration by Rule 14-78 F.A.C. Mr. Alford noted that Jaretha Fletcher, the majority stockholder, was paid the smallest salary of any salaried employee. This indicates to him that the rule in question, which dictates that salary should be consistent with ownership and job responsibility, was not followed. The committee also examined the resumes of the officers and directors with a view toward minority owners. Mr. Alford noted that prior to 1986, two years before the application in question, Mrs. Jaretha Fletcher had been a housewife, and he was concerned that her background did not qualify her to make business decisions. According to Mr. Fletcher, Jaretha signs all checks issued by the corporation though she does not prepare them. She has worked on the preparation of at least one bid. She has acted as signatory for insurance policies covering the operation of the business. She was a personal guarantor on the last capital loan taken out by the business. In addition, the company has developed a computer program which would enable Jaretha to prepare bids on all curb related projects. This, has not yet been implemented, and absent a showing of how much independent judgement and authority she would exercise, by itself, it is not particularly probative of anything. She is also assuming more responsibility in the bidding process though she is not yet qualified to prepare a bid. She has learned to take company owned equipment charges and the daily reports received from the field foremen to prepare reports for the comptroller. She works with the comptroller in determining who of the various business creditors get paid at any given time, and she has begun to serve as a liaison between the corporation and the various contractors who utilize its services. Further, she is in training to use the computer to prepare the weekly payroll. On the other hand, Jaretha is not qualified to go into the field by herself as a supervisor and by her own admission, is "afraid to drive outside the Plant City area." She works in the office daily from 8:00 AM to 3:00 PM except on those days when she has to be with her children. There is substantial evidence to indicate that the participation in business control and operation by Kathleen Fletcher and Jennifer Fletcher Prado is minimal, other than as members of the Board. The Board of Directors' primary function is to set policy for the operation of the Petitioner's business. The business is operated by W. Eddie Fletcher who is employed by the Board as President. He makes the day to day business decisions and decides what matters should be taken to the Board for ratification and approval. It is quite clear from the evidence as presented and all the permissible inferences and presumptions which may be drawn therefrom, that the operation and control of F & M Concrete Company, Inc., is exercised by W. Eddie Fletcher, and the Board of Directors does what he requests of it and provides what he asks. There is evidence, for example, that though the Board must provide for the purchase of major equipment, it "gives approval for whatever Eddie wants." In fact, two contracts, introduced by Respondent, which were prepared and executed by Petitioner with others in the operation of its business, for substantial sums and major projects, failed to reveal the signature or participation of any of the minority owners. All execution was accomplished by W. Eddie Fletcher on behalf of the corporation. After considering all the available information, the Department's committee voted to deny Petitioner recertification. The vote of the committee is not, however, binding on the Director of Administration who has final discretion to approve or disapprove the application for certification. Here the application for recertification was disapproved primarily because it was evident to the committee members and the Director of Administration, that the minority owners did not exercise the requisite amount of control over the operation of the business required under the intent and language of the rule governing minority business enterprise certification. The Department does not claim that the arrangement between the minority owners of the Petitioner corporation and Mr. Fletcher is in any way inappropriate or improper, nor does it deny that Jaretha Fletcher is now learning to participate in the operate in the operation of the business. However, the degree of control over the day to day operations of the business by the minority ownership, notwithstanding the propriety of the delegation of management to Mr. Fletcher, is not sufficient to qualify Petitioner as a minority owned business enterprise. Rule 14-78, F.A.C., allows management to be contracted out, but it does not allow delegation of the policy making function. Here, the committee and the Director of Administration concluded, and it is so found, that the owners of F & M Concrete Company, Inc. did not exercise sufficient control over the business to qualify it for certification. It is abundantly clear from the evidence adduced at the hearing, that Mr. Fletcher is, in fact, F & M Concrete Company, Inc. This conclusion is drawn from the fact that he is closely related by blood and marriage to the three principal owners; that prior to 1987 he owned 43.3% of the stock in the corporation jointly with Jaretha; that none of the principal owners other than Jaretha participate in the decision making process except as members of the Board; and that the Board does not engage in operating the business. Bids are not approved by the Board and operating decisions are within the exclusive province of the management team headed by Mr. Fletcher. Notwithstanding that the terms of the employment agreement between Mr. Fletcher and the Board provide that it may be terminated by the Board at any time for cause, from a pragmatic standpoint, with the Board's makeup being so closely related to Mr. Fletcher, the likelihood of this happening is remote. Instead, it becomes abundantly clear that the attempt to divest Mr. Fletcher from ownership of the corporation and demonstrate a bona fide minority owned and operated business enterprise is in form only and a sham and while the organization is in no way illegal or improper, it is not, in reality, a minority operated business so as to qualify for certification as such.
Recommendation Based on the foregoing findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Petitioner, F & M Concrete Company, Inc.'s application for recertification as a disadvantaged business enterprise be denied. RECOMMENDED this 7th day of December, 1989, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of December, 1989. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings pursuant to s. 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: None submitted. FOR THE RESPONDENT: 1. - 6. Accepted and incorporated herein. & 8. Accepted and incorporated herein. 11.-13. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. 17.&18. Accepted and incorporated herein. 19.-21. Accepted and incorporated herein. COPIES FURNISHED: W. Eddie Fletcher President F & M Concrete Company, Inc. Post Office Box 938 Plant City, Florida 34289-0938 Thomas H. Bateman, III, Esquire General Counsel DOT 562 Haydon Burns Bldg. Tallahassee, Florida 32399-0450 K.N. Henderson, P.E. Secretary Haydon Burns Building 605 Suwanee Street Tallahassee, Florida 32399-0450 Attn: Eleanor F. Turner, M.S. 58 Ruth B. Dillard, Esquire Department of Transportation 605 Suwanee Street, M.S. 58 Tallahassee, Florida 32399-0458 =================================================================
The Issue The issues in this proceeding are whether Gilbert’s bid proposal was responsive to the Department of Transportation’s bid proposal, and whether the Department of Transportation (Department) erred in accepting the bid of Gilbert. State alleged that Gilbert failed to comply with the DBE bid information submittal requirements of Rule 14-78.003(2)(b)3.a., Florida Administrative Code, in filing the DBE forms for the project.
Findings Of Fact State and Gilbert, among other prequalified bidders, submitted timely bids for State Project No. 86075-3423/03175- 3426, which involves the replacement of toll plazas on State Road 93 (also known as Alligator Alley) in Collier and Broward Counties. The project has been referred to in this proceeding as “the Alligator Alley project.” (Agreed Facts) The Department has adopted Rule Chapter 14-78, F.A.C., to govern utilization of DBE’s on state and federally funded construction projects. The specifications for the Alligator Alley project also include Special Provisions for Disadvantaged Business Enterprises, which incorporate many of the requirements of Rule 14-78.003, Florida Administrative Code. Consistent with Chapter 14-78, Florida Administrative Code, and the Special Provisions, the Department assigned Disadvantaged Business Enterprise (DBE) goals to the Alligator Alley project requiring bidders to subcontract 4% of the work to black DBE’s and 8% of the work to non-minority women DBE’s. (Agreed Facts) State and Gilbert submitted their sealed bid packages to the Department before the advertised deadline for bids, 10:30 a.m. on August 28, 1996. A Department review of the amounts bid showed that Gilbert was the apparent low bidder, submitting a bid totaling $9,153,215.07, while State was the apparent second-low bidder, submitted a bid totaling $9,566,051.25. (Agreed Facts) Consistent with Rule 14-78.003(2)(b)3., Florida Administrative Code, and the bid specifications, bidders were permitted to submit DBE Utilization Summary Forms and DBE Utilization Forms within 72 hours after submittal of their bid packages. State and Gilbert timely submitted DBE Utilization Summary Forms, showing the total amount committed to be subcontracted to DBE’s in order to meet each of the DBE goals set for the contract. The two companies also timely submitted DBE Utilization Forms that purported to commit each bidder to subcontract with DBE’s in amounts that totaled those shown in the DBE Utilization Summary Forms. (Agreed Facts) Gilbert’s DBE Utilization Summary Form stated that Gilbert would subcontract $369,000 (or 4% of its total bid) to black DBE’s and $734,600 (or 8% of its total bid) to non-minority women DBE’s. State’s DBE Utilization Summary Form stated that State would subcontract $400,000 (or 4% of its total bid) to black DBE’s and $800,000 (or 8% of its total bid) to non-minority women DBE’s. (Agreed Facts) The Special Provisions of the bid specifications that address the DBE Forms provide as follows: The contractor’s submission shall include the following information (submitted on Form Nos. 275-020-003 Utilization Summary and 275-020- 004 Utilization Form): The names, addresses of certified DBE firms that will participate in the contract. Only DBEs certified by the Department at the time of the bid may be counted toward DBE goals. A description of the work each named DBE firm will perform. The dollar amount of participation by each named DBE firm. If the DBE goal is not met, sufficient information to demonstrate that the contractor made good faith efforts to meet the goals. (Agreed Facts) [Emphasis Supplied] Gilbert submitted DBE Utilization Forms for each of its DBEs stating the DBE’s name, address, telephone number, the signature of the DBE or authorized individual. Gilbert submitted a DBE form for Alco Trucking, a firm owned by a Black male, which stated the value of the subcontracting work to be done as $369,000 without reduction or qualification, and stated regarding the work to be done as follows: Item No. Description of Work (Note if item qualifies for supplier) Various Hauling, aggregates, fill, on site trucking Gilbert submitted a DBE form for Swiftline Trucking, a firm owned by a non-minority female, which stated the value of the subcontracting work to be done as $82,200, without reduction or qualification, and stated regarding the work to be done as follows: Item No. Description of Work (Note if item qualifies for supplier) Various Hauling, aggregates, fill, on site trucking Gilbert submitted a DBE form for Jayalden Enterprises, a firm owned by a non-minority female, which stated the value of the subcontracting work to be done as $264,000, without reduction or qualification, and stated regarding the work to be done as follows: Item No. Description of Work (Note if item qualifies for supplier) 735-74-A Toll Plaza (Partial) 735-74-B Toll Plaza (Partial) Gilbert submitted a DBE form for Precision Contracting, a firm owned by a non-minority female, which stated the value of the subcontracting work to be done as $305,000, without reduction or qualification, and stated regarding the work to be done as follows: Item No. Description of Work (Note if item qualifies for supplier) 544-75-5 Impact Attenuator Vehicular (Partial) 102-1-A MOT (Partial) On each DBE form, Gilbert filled in the line for an “amount to be paid to DBE Subcontractor” and the total committed “toward the DBE goal,” but did not fill in the line for “Amount to be paid to DBE Supplier.” (Agreed Facts) State submitted DBE Utilization Forms for each of its DBEs stating the DBE’s name, address, telephone number, the signature of the DBE or authorized individual. State submitted a DBE form for Metro Engineering Constractors, Inc., a Black owned business, which stated the value of the subcontracting work to be done as $400,000 without reduction or qualification, and stated as follows: Item No. Description of Work (Note if item qualifies for supplier) 120-6 Embankment and 285-701 Limerock Base and Haul & Supply Materials 285-709 Limerock Base and Earthwork State submitted a DBE form for Freedom Pipeline Corporation, a non-minority female owned business, which stated the value of the subcontracting work to be done as $800,000 without reduction or qualification, and stated as follows: Item No. Description of Work (Note if item qualifies for supplier) 121-70 Flowable Fill 400-1-2 Class I Concrete Endwalls through Storm Drainage 514-71-3 Plastic Filter Baric (Riprap) and 1513120-118 Pipe Ductile Iron Pusyh on Joint 8” and 415-1-3 Reinforcing Steel Retaining Walls Retaining Walls and 635-1-11 Pull & Junction Boxes through Sewer & Water 1648100-7 Misc Water Fixt Blow Off Assy 285-701 Limerock Base and Haul & Supply Materials 285-709 Limerock Base and Earthwork State indicated on its DBE forms that both contractors were suppliers of materials and indicated that the total amount of the contract in both cases was to go to the DBE contractor. The Department’s Minority Programs Office is responsible for the implementation of the Department’s DBE program and reviews the DBE Utilization Forms submitted with bids. Kenneth Sweet, who is employed in the Minority Programs Office, had responsibility for reviewing Gilbert’s DBE Utilization Forms and determined that they complied with Rule 14-78.003(2)(b)3.a., Florida Administrative Code, and the Special Provisions of the bid specifications addressing DBE’s. The Department did not contact Gilbert or any of the DBE’s listed on Gilbert’s forms to confirm or obtain clarification of the information stated thereon. (Agreed Facts) The Department posted the bid tabulations for the Alligator Alley project, showing an award to Gilbert as the lowest responsive bidder. State filed its Notice of Protest with the Department’s Clerk of Agency Proceedings on September 23, 1996, 1996, and filed its Formal Protest on October 2, 1996. After this matter was referred to the Division, Gilbert filed its Petition to Intervene on October 22, 1996, which was granted on October 25, 1996. (Agreed Facts) It was stipulated that all of the DBE’s reflected in the DBE Utilization Forms submitted by Gilbert and State were certified DBE’s. (Agreed Facts) Gilbert’s DBE Utilization Forms were submitted to the Minority Programs Office within 72 hours after the project letting and the forms were signed by DBE representatives. The Department is dependent upon the accuracy of the information provided by the bidders to assess DBE participation. Gilbert and one of its DBE’s did not have the identical understanding of the exact scope of the work to be performed by the DBE which might impact how much of the value of the contract would be credited for DBE participation; however, there is no evidence of collusion or fraud in any of the quotes. The Department credits 60% of the value of a contract when the DBE contractor is a supplier of materials, and 100% of the value of the contract when the DBE Contractor furnishes and installs the materials designated as furnish and install items in the specifications. The toll booths and attenuators were not furnish and install items. Gilbert included 100% of the value of the contracts with Alco, Swiftline, Precision and Jayalden as DBE participation. The Department accepted Gilbert’s representations as presented in its DBE forms without questioning what services were being performed or provided by these DBE Contractors. Ken Sweet of the Department’s DBE programs office testified. The Department's justification for not examining the DBE proposals more closely was that the Department requires the prime contractor to adhere to the amount of the DBE work as presented in the forms. While this may be sufficient to maintain the integrity of the DBE program, it is insufficient review to insure that the contractor has complied with the rules for crediting DBE participation and to insure the competitiveness of the bid process. Although Gilbert asserted at hearing that its subcontractors, Swiftline and Alco, would be supplying and placing the materials, it did not so state in its forms. The forms for Alco and Swiftline said, "hauling, aggregates, fill, and on site trucking." There was no basis for the Department to conclude that the contractors were supplying and placing the materials. Further, there was no evidence that Alco and Swiftline were "regular dealers" in fill or aggregates, or identification of their sources of aggregate and fill. Gilbert indicated no item numbers with regard to Alco and Swiftline. If item numbers had been provided, the status of the work as furnish and install items could have been determined. Only two verb forms were used in the "Description of Work" portion of form: “hauling” and “trucking”. Petitioner showed that the value of the contract exceeded the reasonable value of the trucking and hauling to be done on the project. At hearing, Gilbert asserted that Swiftline and Alco were suppliers. This evidence may not be considered. The Department should have limited Gilbert's DBE credit to the value of the hauling and trucking. This was the only work described in the DBE utilization forms. Although the value of the trucking and hauling alone was not proven, it obviously was less than the full contract amount. Gilbert had stated the DBE participation amounts at the minimum required amount. Any reduction of amount creditable to a Black minority contractor would have placed Gilbert below the four percent goal stated in the specifications. The Department credited Gilbert with 100% of the value of the contract with Jayalden towards DBE participation. The DBE Utilization Form for Jayalden does not indicate Jayalden is a supplier or regular dealer. The form does not state Jayalden would install the toll booths. A contractor may obtain 100 percent credit for DBE participation for materials provided by a DBE manufacturer, a DBE regular dealer or a DBE who furnishes and installs items designated furnish and install items in the specifications. The Department knew there were only two approved manufacturers of toll booths. Jayalden was not one of the manufacturers. Neither of the manufacturers were DBE certified. Gilbert's DBE forms did not identify Jayalden as a "regular dealer," and the toll booths were not designated furnish and install items in the specifications The Department must approve additional items as furnish and install items if not designated in the specifications. The Department did not add the toll booths as furnish and install items. The evidence shows that the manufacturer offered to provide the toll booths and install the toll booths for $75,000 each. Jayalden agreed to acquire, ship and install the booths for $76,000 each. A question arises regarding the commercially useful function Jayalden was performing if the manufacturer would furnish and install the nine booths for $75,000 each. In response to the question regarding the commercially useful function Jayalden performed, evidence was presented that Jayalden assumed responsibility for this acquisition and installation of the booths and Jayalden relieved the contractor of "managing" that part of the project. The rules required the Department's approval of the commission or fee paid for management services of this type. The rules do not permit credit for DBE participation of the value of the toll booths. This would reduce the credit for minority non- Black participation by Jayalden from $684,000 to $9,000, less than the required non-Black minority DBE participation. The evidence regarding Precision established Precision was a regular dealer in traffic control devices, and contracted to supply, service and install these devices on the project. The DBE Utilization Form for Precision indicates the Item No. and indicates "Impact Attentuator Vehicular (Partial)" and "MOT (Partial)". Precision's form provided sufficient data to justify being given 100% credit. Gilbert's other DBE forms did not present any special condition warranting increasing DBE credit. The DBE Utilization Forms as submitted by Gilbert failed to mention or identify any special conditions or circumstances affecting the amount of credit Gilbert received for DBE participation. The facts submitted at hearing reveal that at least one special condition or circumstance was applicable to each subcontractor in order to justify crediting Gilbert with 100% of the value of the contract with the DBE toward DBE participation. With exception of Precision, the information was provided only after the bid opening and improperly supplemented the original proposal. The Department had previously approved DBE Utilization Forms providing the same type of information as contained on Gilbert’s DBE Utilization Forms. Had the Department reviewed the proposals as required, Gilbert would have been determined not to have met the DBE specifications. Gilbert did not justify its failure to meet the DBE participation because it facially had met the DBE criteria under the Department's existing policies. In contrast, the DBE form submitted by State for Metro indicates the items numbers involved, and that Metro will “Haul & supply materials and earthwork.” Similarly, the work to be performed by Freedom Pipeline was clearly identified and sufficient information provided to advise the Department of any special conditions affecting the credit to be awarded for DBE participation. One can readily ascertain that the subcontractor is a hauler, supplier and installer of the limestone, and that the contractor should receive 100% credit for minority participation of the contract's value. State was able to meet the DBE participation specification.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That the Department enter its Final Order finding that Gilbert was non-responsive; however, because Gilbert followed the existing policies of the Department which were erroneous, it is recommended that the Department reject all bids and republish the invitation to bid to afford interested contractors an opportunity to file new proposals. DONE and ENTERED this 3rd day of February, 1997, in Tallahassee, Florida. STEPHEN F. DEAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of February, 1997.
The Issue The central issue in this proceeding is whether the Department of Banking and Finance's (Agency) action relating to an intended contract award was arbitrary, illegal, fraudulent or dishonest. Petitioner alleges that the Institute for Instructional Research and Practice of the University of South Florida (Institute) has no statutory authority to perform the contract. The intervenor, Hewitt, Olson & Associates, Inc., joins this allegation. By stipulation at hearing, Petitioner limited its protest, and the issues, to that allegation.
Findings Of Fact The Department of Banking and Finance is the agency with the statutory responsibility to administer and enforce laws related to mortgage brokerage and mortgage lending. It licenses persons eligible to practice in those fields. Eligibility is based, in part, on education and experience as well as on a written test. While the agency formerly administered the tests, it reached the conclusion that it needed a more extensive test; it needed to know whether items were valid and it needed a study guide for people who intended to take the test. For those reasons, it sought outside expertise in its RFP no. BF-12/94-95. The Department received timely responses from Petitioner and the two intervenors in this proceeding. The cover of the bound proposal from the University of South Florida states that the proposal is submitted by the Institute for Instructional Research and Practice, University of South Florida, College of Education, Carolyn D. Lavely, Ph.D., Director. Within the cover is a copy of memorandum of delegation of authority to execute research contracts and grants, by Betty Castor, President of the University of South Florida. There are also separate submittal letters executed by John C. Kuttas, Senior Contracts and Grants Administrator, Division of Sponsored Research at the University, and by Dr. Lavely and Roslyn Heath, Assistant Director, Division of Sponsored Research at the University. (Respondent's Exhibit #3). The services described in the proposal are to be performed by the Institute of Instructional Research and Practice at the University of South Florida. The Institute describes its qualifications on pages 32 and 33 of its proposal: The Institute for Instructional Research and Practice (the Institute) was established in 1984 by the Florida Legislature. Originally respon- sible for research, development, and validation of instruments for measuring subject area knowledge and teacher effectiveness, the Instituted has developed and validated more than 60 examinations for the state's master teacher and teacher certification programs. Since its inception, the Institute has expanded its range of testing activities beyond assessments of teachers to include assessments of students, school admini- strators, and non educators who require testing for professional licensure. The Institute's staff of 35 persons includes statisticians, psychometricians, computer specialists, and editorial and clerical support personnel trained in the provision of products and services directly related to all phases of test development, administration, and statistical analysis. Experienced in all aspects of testing, Institute staff have been actively involved in drafting legislation; setting standards; performing task analyses; developing, validating, and pilot testing specifications and examinations; administering examinations; scoring, analyzing, and reporting the results of a variety of tests for the State of Florida; and conducting related research. Institute personnel manage a large-scale test development operation, conduct research, and document and produce standardized tests. The Institute is now the third largest producer of teacher exams in the United States. (emphasis in original) The University of South Florida has contracted for similar services with several state agencies including the Department of Insurance, the Department of Education, and the Department of Business and Professional Regulation. The Institute provides the testing services and uses the contracts to further its own research and expertise, to collect and analyze data and to train graduate students in the College of Education. RFP no. BF-12/94-95 is not a request for research services and is not a request for a research contract. The services under the contract have research and training components. The Institute does research related to item analysis; it accumulates data as a result of administering the exams and it analyzes and researches the data. Dr. Lavely and other Institute staff publish in research journals and make presentations to research associations based on the experience of the Institute in its testing contracts. Graduate students are involved in the training and research aspects. Thus, it is clear that even if the contracting agency is not receiving a direct research "product", the Institute and the University are deriving a research benefit from the services under the contract. Since its creation by statute in 1984, the Institute's enabling legislation has not been amended. It received an initial appropriation of $750,000 from the legislature, and no appropriation since then. Payments for all contractual services provided by the Institute are routed through the University of South Florida's Division of Sponsored Research. The contract to be awarded from the agency's RFP No. BF-12/94-95 would be considered a "fixed cost contract" by the Institute. Any contracts performed by the Institute are entered into by the University of South Florida through the Division of Sponsored Research.
Conclusions (2)(a) As no petition for hearing has been filed, the right to a hearing has been waived. See Fla. Admin. Code R. 28-5.111. (b) The Department has substantial doubt as to the correctness of the conclusions of the Hearing Officer as expressed in the Recommended Order but declines to rule for the reasons set forth herein. (3)(a) None of the parties to this proceeding have alleged that this agency has acted impermissibly in the bid review process. It is apparent, however, that the process can be improved. In a typical bid proceeding, agency employees draft the bid request, review the bids, and make an initial determination regarding which bid is the lowest responsible bid. If a protest is filed which fails to allege disputed issues of material fact, an employee of this Department may be assigned to act as hearing officer. After the hearing is conducted, the agency head or the designee of the agency head then renders a determination on the bid protest. Accordingly, in the absence of any disputed issues of material fact, the bid process can be conducted solely by personnel of this agency. Such a procedure can hardly command the confidence of the public which rightly deserves an open government and adequate assurances that the bidding process is effectuated without bias or favoritism of any kind. In cases where there are disputed issues of material fact, the Hearing Officer of the Division of Administrative Hearings is limited to deciding whether the agency acted fraudulently, illegally, arbitrarily, or dishonestly. Accordingly, even in instances where a person independent from the agency reviews the bid process, such person's input is limited. Therefore, it seems apparent that more should be done to give the public and persons who wish to do business with the State of Florida confidence that tax dollars are being spent in the most appropriate manner. Based upon the foregoing, efforts must be made to improve the process so that the citizens of the state can be assured that there is adequate oversight in the bid process. There is the additional concern that ways must be found to increase the involvement of the mortgage brokerage industry in the testing process. The present process proposes that the state, or an agent of the state, develop the test, administer the test, score the test, and post the results of the test with little or no participation from the mortgage brokerage industry. While there is a legitimate function for state government in the testing process, efforts should be made to include the mortgage brokerage industry in the process. It seems apparent that implementing the above-stated principles will require the input of both the private and public sector and may also necessitate the implementation of statutory amendments. Based upon the foregoing, it is in the best interest of the state not to award the contract to any person at this time pending review of the bid process especially in view of the fact that the Department is able to administer the test on at least a temporary basis while this matter is resolved.
Recommendation Based on the foregoing, it is hereby, RECOMMENDED that the Department of Banking and Finance enter its final order awarding the contract in RFP BF-12/94- 95 to the University of South Florida. DONE AND ENTERED this 28th day of July, 1995, in Tallahassee, Leon County, Florida. MARY W. CLARK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 1995. COPIES FURNISHED: W. Douglas Moody, Jr., Esquire William B. Graham, Esquire 300 East Park Avenue Tallahassee, Florida 32301 Henry W. Lavandera, Esquire University of South Florida ADM -250 4202 East Fowler Avenue Tampa, Florida 33620-6250 Jack Silver, Esquire 439 Northeast Seventh Avenue Fort Myers, Florida 33301-1207 Margaret S. Karniewicz, Esquire Department of Banking and Finance Suite 1302, The Capitol Tallahassee, Florida 32399-0350 Honorable Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 Harry Hooper, General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0350
The Issue The issue in this case is whether the Department of Transportation should revoke the certification of ACS-Associated Contractual Services, Inc. (ACS), as a disadvantaged business enterprise (DBE) under Chapter 339, Florida Statutes (1997), and Florida Administrative Code Chapter 14-78.
Findings Of Fact ACS-Associated Contractual Services, Inc. (ACS), held a one-year certificate as a disadvantaged business enterprise (DBE) under Chapter 339, Florida Statutes (1997), and Florida Administrative Code Chapter 14-78, effective May 22, 1997, through May 21, 1998. From the time of ACS's application for DBE certification, John Scribner had been ACS's President, primary contact with the Department, and one-third owner. By letter dated October 10, 1997, Scribner advised the Department that he had become the majority owner and that his company no longer qualified for DBE certification. ACS did not apply to renew its DBE certificate prior to its expiration on May 21, 1998, and has not applied for certification since. Ordinarily, these facts would moot a revocation proceeding, but the Department's Minority Program Office Manager testified that the Department has a curious policy under which it has been maintaining ACS's DBE certification until the resolution of these proceedings notwithstanding its earlier expiration.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation enter a final order revoking ACS's certification as a disadvantaged business enterprise (DBE) under Chapter 339, Florida Statutes (1997), and Florida Administrative Code Chapter 14-78. DONE AND ENTERED this 19th day of November, 1998, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 19th day of November, 1998. COPIES FURNISHED: Rafael A. Robles, Esquire Post Office Box 3235 Spring Hill, Florida 34611-3235 Kelley A. Bennett, Assistant General Counsel Department of Transportation 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0458 Thomas F. Barry, Secretary Attention: James C. Myers, Agency Clerk Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0450 Pamela Leslie, General Counsel Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0450
The Issue At issue here is whether certain policies of the Respondent are unpromulgated rules which violate Sections 120.535 and/or 120.56, Florida Statutes. Those policies are more completely described in the fact finding. An amended petition which had been dismissed in part sets forth Petitioners' claims.
Findings Of Fact The Parties Bay Bank and Trust Company is a state-chartered commercial bank. Its deposits are insured by the Federal Deposit Insurance Corporation. It is subject to examination and supervision by the Florida Department of Banking and Finance in accordance with Chapters 655 and 658, Florida Statutes. Respondent's regulatory authority is referred to as the Financial Institutions Codes. John Christo, Jr. and John Christo, III are members of the Board of Directors of Bay Bank and Trust Company. In addition, John Christo, III serves as Vice-Chairman of the Board of Directors. The Christos are subject to supervision by the Florida Department of Banking and Finance pursuant to Chapters 655 and 658, Florida Statutes. Respondent operates in accordance with Chapters 655 and 658, Florida Statutes; rules promulgated pursuant to the statutes and policies not promulgated as rules. Questioned Policies When Respondent conducts statutorily required examinations of state chartered banks, it utilizes a manual produced by the Federal Deposit Insurance Corporation. The manual provides guidance to Respondent's examiners in assessing the bank's condition during the examination. The manual has been utilized by Respondent since 1977. Among the features in the manual is a rating system designed to measure the banks condition related to capital, asset quality, management, earnings and liquidity. This rating system is referred to as CAMEL. Respondent's examiners utilize that system in assessing a bank's financial condition and the banking practices within the institution. Among the functions of the examination process is the requirement to ascertain whether a bank is considered to be unsafe and unsound, and the CAMEL rating system plays a role in that determination. The FDIC Manual also includes criteria related to federal banking statutes and regulations. In this connection the Respondent considers violations of federal law when conducting examinations and making assessments about the condition of a bank. Respondent will take enforcement action against a bank for alleged violations of federal law. When updates are received that pertain to the FDIC Manual, Respondent sends those updates to its examiners for use in the field. The FDIC Manual had not been adopted by the Respondent as a rule in the past. However, on August 6, 1993 Respondent noticed its intent to adopt the FDIC Manual as a rule by its incorporation by reference together with other manuals. The version of the FDIC Manual to be adopted by reference is the current version being utilized by the Respondent's employees. The current version includes two updates issued by the FDIC since 1990. The changes after 1990 have not dramatically modified the policy positions within that document. They constitute only refinement of those matters contained in the 1990 edition and revisions in accounting practices. Respondent has produced its own Examination Procedures Manual. That document is designed to provide guidance to Respondent's employees in conducting examinations of banks. It explains the procedures that the examiners should follow in conducting examinations, including the basic requirement to assess the bank's condition. It employs the CAMEL rating system. By its terms the Examination Procedures Manual affords latitude to the examiners to deviate from the guidelines set forth in the manual if the deviations are supported by written justification for those departures. The Examination Procedures Manual has remained constant since 1989 with the exception of some handwritten changes on the first page. Those handwritten notations summarize policies to be found within the manual. They do not constitute material changes to the policies set forth in the manual. The Examination Procedures Manual is designed to inform the examiners concerning Respondent's position concerning examination procedures and changes in examination techniques. While Respondent reserves to itself the opportunity to amend and revise the Examination Procedures Manual, as needed, it can be seen that no substantial changes have been made since 1989. As far back as 1984 it is has been the Respondent's policy not to provide copies of the Examination Procedures Manual to institutions being examined under its terms. On the other hand, there has never been a prohibition against allowing members of the banking industry in Florida or others to have access to the manual. The examination reports which are prepared consistent with procedures set forth in the Examination Procedures Manual are made available to the institution under examination. Moreover Respondent, for the first time, gave notice on August 6, 1993, of its intent to adopt the Examination Procedures Manual by reference within a proposed rule. Among the features in the Examination Procedures Manual are comments concerning expected documentation to support loans made by the banks, instructions to examiners on how to grade a bank and how to proceed with the examination, to include various operational steps to be taken during an examination and personnel duties. The Examination Procedures Manual makes reference to the need for bankers to adhere to safe and sound banking practices. Another manual used by Respondent's examiners is referred to as Management Evaluation Guidelines. This document is derived from the State of Texas. As its title suggests, it is designed to assist the Respondent in making assessments of bank management when conducting examinations. Those factors to be utilized in assessing bank management are in addition to guidelines set out in the FDIC Manual and the Examination Procedures Manual. The Management Evaluation Guidelines manual is constituted of initial instructions about its use and worksheets to be executed in the assessment of bank management. The Management Evaluation Guidelines document makes reference to a tie-in with the CAMEL rating system. Respondent's examiners routinely use the worksheets in performing examinations. Again the Management Evaluation Guidelines document had not been adopted as a rule; however, on August 6, 1993, Respondent gave notice of its intent to adopt the document as a rule through incorporation by reference together with the aforementioned manuals. Concerning the CAMEL rating system, the ratings range from one to five. One represents the best rating and five the worst. Each component part of the CAMEL rating system is assigned a score from one to five and then an aggregate score is assigned for all components, but not by averaging the component parts. The CAMEL rating system originated with the Federal Financial Institutions Examination Council and was designed to identify institutions that needed closer supervisory attention. This system has been used in the regulation of banks since the 1970's. As described, all three manuals referred to before incorporate the Camel rating system. The FDIC Manual and Examination Procedures Manual include definitions of the numerical ratings. The ratings are arrived at by examination of the bank's records and other information gathered during the examination sessions. There is a correlation between CAMEL ratings in the aggregate range of four or five and the perception that the bank is engaged in unsafe or unsound practices and the consequent susceptibility to the imposition of costs for examination and supervision of the bank and other administrative actions against the bank or its officials. Flawed or unsatisfactory performance leads to the poor CAMEL rating. Respondent has not promulgated rules which describe those occasions wherein it will assess the bank for the costs of the bank examination and supervision. Other than through information gained during the examination concerning perceptions held by the examiners about the CAMEL ratings for the bank, as reflected in the examination report provided to the examined bank and through the manuals, Respondent has made no attempt to specifically describe its use of CAMEL ratings. Other than the incorporation by reference into a proposed rule, the FDIC Manual, Examination Procedures Manual and Management Evaluation Guidelines Respondent has made no attempt to further explain the CAMEL rating system by rule promulgation. The Examination Procedures Manual contemplates the exercise of discretion by examiners in performing bank examinations. The examiners draw upon their experience in a somewhat subjective process and in recognition that the activity they are engaged in requires flexible thinking. For that reason the examiners are permitted the previously described opportunity to deviate from the guidelines set forth in the respective manuals when assessing and assigning CAMEL ratings for the bank's performance. Nonetheless, the examiners must account for these deviations by justifying their choices in writing consistent with the requirements set forth in the Examination Procedures Manual. The perceptions held by the examiners as set forth in the examination report are also subject to review by the examiner's superiors and may be changed through that review process. There are no formal written rules or other written guidance concerning the occasion upon which the Respondent would seek a written agreement as opposed to imposition of a cease and desist order in trying to correct problems within a bank discovered through the examination process. These decisions are exercises of discretion consistent with the findings made during the examination. As already mentioned, the findings in the examination may lead to the assessment of examination costs and other actions taken against the institution or its principals based upon the use of the manuals in conducting the examination. By using the three manuals Respondent has substantially and materially affected the institutions which it regulates and the actions of the officials within those institutions, to include the present Petitioners. By resort to the three manuals and through the exercise of its discretion, Respondent in the companion cases, DOAH Case No. 92-2455 and DOAH Case 92-3744 has sought to recover the costs of examination and supervision and has taken action calling for those involved to cease and desist their practices and has sought the removal of John Christo, Jr. and John Christo, III as principals within the bank. The Respondent does not provide copies of the Examination Procedures Manual and FDIC Manual to the public. Respondent does not deem the failure to provide those manuals to the public as an inappropriate oversight. The Respondent is not conversant with opportunities which the public may have to obtain the FDIC Manual from federal officials. Respondent makes the assumption that the FDIC Manual is available from the FDIC. Neither does Respondent publish the Management Evaluation Guidelines for the benefit of members of the regulated banking industry. Respondent would provide a copy of the Management Evaluation Guidelines on request. Obviously the rule adoption process that is underway contemplates publication of the existence of the three manuals. The three manuals used by the Department are not deemed to be confidential. Prior administrative orders of the Respondent are generally available upon request. On the other hand, certain statutorily protected matters are not available to the extent that they are deemed to be confidential. Respondent maintains information on what has been referred to as questionable bankers. This information is a resource for Respondent's employees. It identifies bank officials who have been removed from a given institution and whether certain bank officials have a criminal history. Information concerning the problem bankers that is maintained by Respondent may be provided to institutions where a problem banker seeks employment or has obtained employment and to other regulators. This information is not generally provided to the public. Banks regulated by Respondent prepare quarterly reports of condition that synopsize assets, liabilities, capital position, income and expenses. This information is used by Respondent in determining whether the bank is operating in a safe and sound manner. Customarily Respondent has accepted quarterly reports in a format suggested by a call report form created by the Federal Financial Institution Examination Council. The format suggested by that group is not mandatory. It is necessary for the reporting bank to include similar information to that described in the Federal Financial Institution Examination Council approach for preparing quarterly reports to allow Respondent to assess the bank's operation. Use of the Federal Financial Institution Examination Council quarterly report form is a common occurrence because reporting institutions have chosen to use that form for technological reasons. In the Examination Procedures Manual reference is made to the anticipated difference between internal controls to be imposed by large banks as compared to smaller banks. Nonetheless, the Examination Procedures Manual describes the importance of internal controls for all institutions as contributing to a strong well-run bank. For that reason, violations of internal policies or controls may promote criticisms of the institution when assessing its performance through the examination process. Often, but not always, violation of the internal policies may cause Respondent to bring enforcement actions against the institution or its principals. Respondent makes the assumption that internal policies are designed to assist the institution in maintaining a safe and sound operation. The policies differ within each institution depending on its marketplace. As noted previously, when the examiners have concluded the examination they generate a "Report of Examination." This report is not a final order entered by the agency head. It may lead to action taken by the agency head, but it does not constitute proposed final action by its own terms. Therefore, the involvement by Terrence Straub, Director of the Division of Banking in his supervisory capacity related to creation of a "Report of Examination" does not constitute the delegation of final order authority from the Comptroller as agency head to Terrence Straub, as Director of the Division of Banking. A cease and desist order constitutes proposed final agency action. Terrence Straub has a role to play in making recommendations concerning the entry of a cease and desist order, but does not have final order authority in deciding the outcome of a cease and desist case. Terrence Straub and bureau chiefs in his charge notify banks of the Respondent's intent to assess examination costs and that the failure to pay those costs may subject the institution to financial penalties for failure to remit the examination costs. However, if the institution fails to honor the notice of assessment of examination costs and the claim for financial penalties for nonpayment of the examination costs, formal action is taken through an administrative complaint calling for the assessment of examination costs and financial penalties for late payment. The administrative complaint is not drawn under the auspices of Terrence Straub or the bureau chiefs. Notice of rights concerning the ability to contest the assessment of examination costs and financial penalties for late payment of the examination costs is provided with the administrative complaint.
Findings Of Fact The Respondent, Oglesby Construction, Inc., (Oglesby) is a company with its ownership controlled by members of a protected minority. Its home office is in Norwalk, Ohio, and it also has an office in Sanford, Florida. It has been certified as a "disadvantaged business enterprise" (DBE) under pertinent regulations of the U.S. Department of Transportation, as well as State Transportation Departments in twelve or thirteen states, including Florida. Prior to 1986, the company was engaged in various types of concrete work and pavement marking jobs. Although Oglesby typically maintained several hundred contracts or ongoing jobs on its books, each job would be of relatively small dollar value and performance time. Recently, however, Oglesby has been working toward becoming a "prime" contractor, successfully bidding on larger jobs. It was successful bidding on four such projects in 1986 and 1987 which had been reserved for bidding on by minority controlled companies. Oglesby has been certified as a DBE in Florida since 1983. On January 26, 1987, Oglesby was advised by the Florida Department of Transportation that its certification "will expire" on February 18, 1987. Oglesby, in fact, because it was aware that certification had to be renewed or reapplied for annually, had already submitted its application on January 2, 1987. It included in that application indication of its gross receipts for the years 1983, 1984, and 1985. Those numbers, when averaged together, produced an average gross revenue figure of $10,491,778. Oglesby maintains that it did not know its 1986 gross revenue figure, for purposes of the three year average gross revenue, for the most recent three years, required to be shown on the application by the Department's rules, because its fiscal year ended January 31, 1987. On March 26, 1987, Oglesby's application for recertification was rejected by the Department because it did not meet the definition of a "specialty contractor" or "small business concern," for purposes of Rule 14- 78.05, Florida Administrative Code. A hearing was requested by Oglesby to contest this denial of certification. Then, on May 8, 1987, the Department circulated a memorandum to all DBE contractors stating generally that the effect of the Surface Transportation Act of 1987 (Sturra) required several changes to the Disadvantaged Business Enterprise program. Thus, contractors were asked to certify their firms' receipts for the last three years. Oglesby did so and showed receipts totaling $44,320,469 for the years 1984, 1985, and 1986. These gross receipts for the three years thus averaged $14,773,049. The Department, upon receiving this information, and after passage of the Sturra Act and a statute by the Florida Legislature incorporating those standards by reference, together with a related rule by the Department, moved to amend the basis for its denial to include, as a reason for decertification, or failure to certify, that the Respondent had exceeded the new $14,000,000 average revenue size standards incorporated in the more recent legislation. Prior to this legislative change and at the time Oglesby applied for recertification in January, 1987, the standard had been $17,000,000 average three year gross revenue receipts, instead of $14,000,000. The Department, by pleading dated August 24, 1987, had withdrawn its original grounds for denial and amended the grounds to the above-mentioned size issue of $14,000,000. Because the parties did not wish to go to hearing until January 1988, and ample time remained for Oglesby to conform its proof to the new allegations in the amended pleading, the Motion for Leave to Amend was granted. Thus the amended ground on which the Department maintains that Oglesby's application for recertification should be denied is that the company, for purposes of DBE certification, is no longer a small business concern, as defined by the Department's rule and state and federal law incorporated by reference. On April 2, 1987, when the size limit for DBE firms was lowered from $17,000,000 to $14,000,000, the new standard was immediately adopted by the Florida Legislature and, in turn, by the Department's rule. When Oglesby applied to the Department in early 1987, it did not include its 1986 gross receipts revenue figure of $18,516,598. Although Oglesby's fiscal records are computerized, Oglesby maintained that it did not yet, at the time of application in January 1987, have a complete 1986 revenue figure so instead listed the 1985 revenue receipt figure of $18,037,348. The 1984 receipts and 1983 receipts were $8,338,017 and $5,099,060 respectively. The inclusion of the significantly lower 1983 revenue receipts brought the three year average for Oglesby down to $10,491,778. In any event, although Oglesby may not have had the 1986 revenue figure immediately available upon application date, it was on notice that its revenue receipts for the year prior to that, 1985, exceeded even the $17,000,000 size limit for DBE contracting firms and thus was on notice that it might be approaching the end of its DBE status even had not the revenue size limits been lowered in the spring and summer of 1987. In any event, Oglesby's audited financial statements submitted indicate that Oglesby received $18,037,348 in construction revenue in 1985. The 1986 figures were supplied to the department due to a request made to all certified DBE's when the Department learned that the size limits were being revised downward by federal and state legislation in May of 1987. That audited financial statement figure for 1986 showed a gross revenue received of $18,399,844 in construction income, and $116,754 in equipment rental, totaling $18,516,598 gross revenues for 1986. When these amounts are averaged with the gross revenue figure listed in Oglesby's application for 1984 of $8,338,017, the average gross revenue receipts for the company for the preceding three fiscal years before application, is $14,963,987. Each year Oglesby was advised by the Department in the "certification notice," by which Oglesby was informed by the Department that its certification needed to be renewed, that its certification was "subject to continued eligibility" and further that its certification was "subject to actions of any other governmental agencies which may affect the minority status" of the company. Thus each year when Oglesby applied for and received DBE certification, it was on notice of these conditions on that certification, both by advisement of the Department's notices and by existing law. Oglesby is the only previously certified DBE which, at the time of hearing, exceeding the $14,000,000 average gross revenue size limit. Under the new federal law referenced above, incorporated by reference by the Florida Legislature and the State Department of Transportation rule at issue, an adjustment for inflation is allowed, to be made by the U.S. Secretary of Transportation. The Department, at the request of Oglesby, inquired of the federal government whether any such adjustment for inflation had been made. No such adjustments had been made by the U.S. Department of Transportation Secretary as of January 5, 1988. On November 4, 1987, a memorandum, (in evidence as Respondent's Exhibit 11) from the Federal Highway Administrator, affirmed that the inflation adjustment had not been defined as yet and would not apply until a method for arriving at an inflation adjustment is developed. The Department also contacted the Federal Highway Administration in order to determine whether an exception on the size limits required by the federal statute and pertinent regulation could be made in Oglesby's case. This was because Oglesby had made certain contractual obligations to buy out the white minority shareholders and purchase or lease a new facility supposedly based on, in part, its reliance on continued DBE status. The Department referenced these concerns of Oglesby in its request to the Federal Highway Administration for an interpretation regarding the applicability of the $14,000,000 revenue limit, but was advised, in effect, that the $14,000,000 limit was strictly interpreted because the response to the request merely amounted to a recitation of the statute and pertinent federal rule providing for that limit and how to calculate it. (See Respondent's Exhibits 9 and 10.) Additionally, Respondent's Exhibit 11, a memorandum of November 4, 1987, from the Federal Highway Administration signed by one R. A. Barnhart, in a like vein, merely indicated a strict interpretation of the federal rule cited below providing for the $14,000,000 average gross revenue limit on DBE status. This federal policy of strictly interpreting the $14,000,000 limit is somewhat borne out by the fact that the example in the federal rule itself, concerning how to apply that limit, with the result that the example firm is not entitled to DBE status, involved an average three year gross income of more than $14,000,000, but less than the three year average gross revenue of Oglesby, found above. The Department has a policy of strictly enforcing the certification requirements. The failure to comply with the federal regulations regarding DBE certification could subject the Department to withdrawal of federal funds from road building projects. Last year the Department received about $600,000,000 in federal funds and the federal government independently audits and reviews the Department's DBE certification decisions. The Department thus has not made any exception from the certification requirements for any firms. Indeed, in analogous circumstances, there have been Department-certified DBE specialty contractor firms who have outgrown their 2.5 million dollar revenue size standards which are applicable to firms in that category. These firms have not had their certifications renewed, that is, they have "graduated" from the Department's DBE program without exception and without dispute. It is the intent of the Disadvantaged Business Enterprise Program that firms participating in that program, will, as they acquire and perform contracting jobs for the Department, grow in size in terms of annual revenues and grow in expertise and competence in public contracting, eventually "graduate" in terms of revenue volume and contracting expertise to prime contractor status and will no longer be disadvantaged business enterprises. In this connection, Oglesby has recently entered into four prime contracts which are not affected by the result of these proceedings. In fact, no work already undertaken by Oglesby under contract will be affected. Even if it is not certified as a DBE, Oglesby may continue to contract with the Department as a subcontractor or a prime contractor. Mr. Mason P. Oglesby, the Petitioner's president, is a competent concrete construction contractor and has been in that business for some thirty years. He is also president of North Coast Eighty-Eight, Inc. Prior to any association with the DBE program, he managed the largest construction project his company has engaged in, which was a project involving construction at the Cincinnati, Ohio, Airport. His firm achieved DBE certification in Ohio in the early 1980's and has been so certified ever since. Oglesby has been certified in twelve or thirteen different states and has utilized 700 to 1000 part-time and full-time employees in a given year. The company does a high volume of work, including many large contracting jobs, and is large enough so that its president does not maintain personal familiarity with the nature of all its jobs contracted for in Ohio, Florida, and other states, but rather maintains a computerized listing of projects which describes the nature of work involved. The company currently has jobs in progress in Pennsylvania, Georgia, Ohio, North Carolina, South Carolina, and West Virginia and in twenty-four counties in Florida simultaneously. Mr. Oglesby closely monitors the dollar volume of work his company contracts for in an intentional effort to keep his firm within the gross revenue guidelines of the DBE program. One of the bases for Oglesby's seeking an exception to those size rules, through this proceeding, is based upon the fact that it entered into a contract to relocate its offices because, for several years, Oglesby has had problems with DBE certification with some states, related to Oglesby renting office space from the white minority owners of Oglesby. Thus the new offices are rented from North Coast Eighty-Eight, Inc., whose president is Mason Oglesby himself. The rental lease for those premises was executed on June 1, 1987, after Oglesby had already been advised by the Department that it no longer met the requirements for DBE certification. Thus, it has not been established that Oglesby underwent any additional expense or other form of detriment involved in the relocation of its offices in justifiable reliance on continued DBE certification. Oglesby also maintains that it made the related business decision to buy out the white minority shareholders in reliance on its continued DBE certification by the Florida DOT. Oglesby, however, made the business decision to undertake that buy-out and the relocation of its offices with full knowledge that its revenues for past two consecutive years were over $18,000,000 each year. Thus it was on notice that, due to a growth in its business, it would soon exceed even the former $17,000,000 gross revenue size standard and, with the advent of its 1986 gross revenues in excess of $18,000,000, was already in excess of the existing new $14,000,000 standard. Thus Oglesby Construction, Inc., entered into these arrangements with the knowledge that the company would soon be ineligible for the DBE program anyway. In fact, Oglesby currently is successful as a prime contractor in obtaining jobs which are not DBE related and has developed considerable concrete and construction expertise in operating its construction business as a public works contractor.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore RECOMMENDED that the application of Oglesby Construction, Inc., for certification as a disadvantaged business enterprise by the Florida Department of Transportation be denied. DONE AND ENTERED this 3rd day of August, 1988, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-1956 Petitioners Proposed Findings of Fact Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Rejected; subordinate to Hearing Officer's findings. Accepted. Rejected, Immaterial. Accepted. Accepted. Rejected, immaterial. Accepted. Accepted. Rejected; subordinate to Hearing Officer's findings. Rejected, immaterial. Accepted. Rejected; subordinate to Hearing Officer's findings. Accepted. Accepted. Accented. Accepted. Accepted. Accepted. Accepted. Accepted. Respondent's Proposed Findings of Fact Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted, but not dispositive. Rejected; subordinate to Hearing Officer's findings. Rejected; Irrelevant. COPIES FURNISHED: Kaye N. Henderson, P.E., Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450 Judy Rice, Esquire Senior Attorney State of Florida Department of Transportation Haydon Burns Building, Mail Station 58 605 Suwannee Street Tallahassee, Florida 32399-0458 Robert L. Sabo, Esquire MILLISOR & NOBIL The Huntington Center 41 South High Street, Suite 2195 Columbus, Ohio 43215
The Issue The issue is whether the Respondent, Cedric Mitchell (Respondent), committed the violations alleged and, if so, what penalty should be imposed.
Findings Of Fact The Petitioner is a duly constituted entity charged with the responsibility and authority to operate, control, and supervise the public schools within the Miami-Dade County Public School District. As such, it has the authority to regulate all personnel matters for the school district. See § 1001.32, Fla. Stat. (2006). At all times material to the allegations of this case, the Respondent, Cedric Mitchell, was an employee of the School Board and was subject to the disciplinary rules and regulations pertinent to employees of the School District. On or about July 20, 2005, the Petitioner’s Office of the Inspector General issued a memorandum to Dr. Rudolph F. Crew, the Superintendent of Schools, that referenced 106 teachers who were identified by a grand jury investigation of teachers who obtained academic credits from Eastern Oklahoma State College. The Respondent was one of the teachers. Thereafter, a lead sheet was generated to direct the Miami-Dade County Schools Police Department to conduct an investigation of the allegations. The claim asserted that the Respondent had obtained academic credits for the purpose of certification, recertification and/or endorsements without availing himself of actual academic class time, work, or effort. Michael Alexander, a detective with the Miami-Dade Schools’ Police Department, was assigned to the matter. Detective Alexander interviewed the Respondent on or about November 29, 2005. At that time the Respondent waived his right to representation and freely admitted to the detective that he obtained course credit from Eastern Oklahoma State College but attended no classes and did no coursework. According to the detective, the Respondent described a scenario whereby the Respondent went to Palmetto High School on a Saturday and spoke with a “Dr. McCoggle” who advised him as to the coursework needed for certification and charged him $775.00. After making the payment to Dr. McCoggle, the Respondent did nothing of an academic nature to complete coursework. Sometime later a transcript denoting the appropriate coursework came to the Respondent’s home. Despite having performed no academic work to achieve the credits, when he received the transcripts for the courses, the Respondent submitted them to the Petitioner to achieve certification. Had he not submitted documentation of the courses needed for certification, the Respondent would have been terminated from his employment with the School District. There is no evidence in this record that the Respondent actually ever legitimately completed the academic course work necessary for certification. Even after the Respondent knew or should have known that the procedure he used to achieve certification was unacceptable, there is no evidence that the Respondent ever completed academic course work to support the Respondent’s certification to teach for the Miami-Dade Public Schools. Once the Respondent became aware that he was under investigation for participating in the inappropriate scheme to obtain college credit, he joined the teachers’ union and sought the union representative’s advice regarding the matter. According to the union representative, Michael Molnar, the Respondent did not indicate to him that he had done no course work or attended no classes. Had the Respondent been candid in that matter, Mr. Molnar would have advised the Respondent not to implicate himself or to resign before implicating himself. Because that was not the case, the union representative told the Respondent to be truthful and honest in answering the questions posed by the Petitioner. To that end, the Respondent confirmed the information regarding his credits from Eastern Oklahoma State College when questioned by the Petitioner. The Respondent did not contest the findings reached in Detective Alexander’s report of the investigation. The Respondent did not contest the findings asserted in the Summary of Conference-For-The-Record prepared by Lucy Iturrey. The Respondent was not coerced or otherwise forced to admit that he accepted college credit from Eastern Oklahoma State College and submitted that credit for certification purposes. Had the Respondent been candid with the union representative and been advised that he could refrain from making a statement to the Petitioner (and obviously did not admit the facts of the scheme), the underlying facts regarding the scheme (to give academic credits where no credits were earned) could have been ascertained through other means. The widespread use of the scheme was well- documented and led to the successful criminal prosecution of its “kingpin.” The School Board of Miami-Dade County took action at its meeting on March 15, 2006, to suspend and initiate dismissal proceedings against the Respondent. That preliminary action acknowledged that the outcome of the matter was subject to an administrative hearing if requested by the employee. The Respondent timely requested an administrative hearing to contest the proposed action and the case was timely forwarded to the Division of Administrative hearings for formal proceedings.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the School Board of Miami-Dade County enter a Final Order terminating the Respondent’s employment contract. Whether or not the Respondent could be eligible for re-employment with the Petitioner should be based upon whether the Respondent ever achieves the academic status for certification based upon academic performance and coursework completed through a legitimate means. DONE AND ENTERED this 15th day of February, 2007, in Tallahassee, Leon County, Florida. S J. D. Parrish Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of February, 2007. COPIES FURNISHED: Dr. Rudolph F. Crew, Superintendent Miami-Dade County School Board 1450 Northeast Second Ave, No. 912 Miami, Florida 33132-1394 Daniel J. Woodring, General Counsel Department of Education Turlington Building, Suite 1244 325 West Gaines Street Tallahassee, Florida 32399-0400 John L. Winn, Commissioner of Education Department of Education Turlington Building, Suite 1514 325 West Gaines Street Tallahassee, Florida 32399-0400 Jean Marie Middleton, Esquire School Board of Miami-Dade County 1450 Northeast Second Avenue, Suite 400 Miami, Florida 33132 Lawrence R. Metsch, Esquire Metsch & Metsch, P.A. Aventura Corporate Center 20801 Biscayne Boulevard, Suite 307 Aventura, Florida 33180-1423
Findings Of Fact On October 17, 1994 Petitioner, in order to be recertified, submitted its Application for Certification as a DBE to the Department. Following an initial review of Petitioner's application, the Department determined that the application as submitted was incomplete. On October 27, 1994, the Department sent Petitioner a certified letter requesting additional information including: A copy of Petitioner's financial state- ment for the year ending December 31, 1993, showing its gross receipts. Answers to questions 24, 25 and 26, of Petitioner's Application. Copies of Petitioner's State Quarterly Unemployment Tax Report (LES Form UCT-6) for the last three quarters. A copy of Petitioner's annual report submitted to the Department of State, Divi- sion of Corporations, for 1994. A completed code sheet indicating the Petitioner's area of specialty. Documentation indicating Petitioner's ethnic status. The Department's request for additional information was received by Petitioner. The Department's request for additional information notified Petitioner that it must submit the requested information within thirty days if it was to be considered by the Department in its determination of recertification. All of the additional information requested by the Department was critical in determining Petitioner's inclusion in the DBE Program. Specifically it pertained to whether Petitioner continued to be qualified as a Small Business Concern. The Petitioner failed to respond to the Department's request for additional information. The Petitioner did not request an extension of time for filing a response to the Department's request for additional information. On January 10, 1995, having reviewed no response to its request for additional information, the Department processed Petitioner's application as it was originally provided. The Department notified Petitioner of its intent to deny its Application based on Petitioner's failure to demonstrate that it is a Small Business Concern. On January 30, 1995, Petitioner requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. However, as indicated above, Petitioner failed to appear for the properly noticed hearing and presented no evidence that it qualified as a Small Business Concern. Petitioner has constructively abandoned its request for recertification as a DBE.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Petitioner's Application for Certification as a DBE. DONE and ENTERED this 4th day of June, 1996, in Tallahassee, Florida. DANIEL M. KILBRIDE, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of June, 1996. COPIES FURNISHED: Murray M. Wadsworth, Jr. Assistant General Counsel Department of Transportation Haydon Burns Building, Mail Station 58 605 Suwannee Street Tallahassee, Florida 32399-0458 Surack D. M. Singh, President S. D. Mass Singh Contracting, Inc. 5425 South Semoran Boulevard, Suite 1-A Orlando, Florida 32822 Ben G. Watts, Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450 Thornton J. Williams, General Counsel Department of Transportation 562 Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450
Findings Of Fact Based upon the prehearing stipulation, the testimony of the witnesses, and the documentary evidence received at the hearing, the following findings of fact are made: Sometime prior to May 27, 1992, the Department solicited bids for contract no. 18103, section/job no. 11130-3518 (the project). The DBE goal for the project was stated at ten percent. The bids for the project were opened on May 27, 1992, and six timely bids were received including one from Hubbard and one from APAC. Hubbard's bid was the apparent low bid at $1,573,558.00 when compared to APAC's bid of $1,706,337.22. All other bids were presumably higher and are not at issue in these proceedings. All such bids were, however, deemed responsive by the Department. The Department established two dates for the posting of the award for this project. One date, June 18, 1992, was twenty-two days after the letting. That calculation requires that the actual letting date (May 27, 1992) be counted as the first day. The second date, using the same approach, was specified at forty days after the letting, July 6, 1992. The Department elected to post for this project on day 22, and its intent to award the contract to APAC was therefore disclosed on June 18, 1992. Hubbard timely filed an initial protest to the intent to award, and subsequently timely filed its formal protest on June 29, 1992. The Department rejected Hubbard's bid solely because one of its subcontractors, CDS Trucking, was not on a list of certified DBE firms on the day the bids for the contract were opened. Hubbard is a highway construction contractor which bids for, and performs, highway construction projects with the Department and other public entities. Hubbard is aware of public contracts that require a specified percent to be performed by DBE subcontractors. In fact, most of Hubbard's work is performed pursuant to such contracts and, as Petitioner has been in business for a number of years, it has vast experience meeting DBE goals. More important, Petitioner has never failed to meet a DBE goal. The Department is fully cognizant of Hubbard's past performance and reputation regarding compliance with DBE goals. When it receives an invitation to bid on a public construction project, Hubbard contacts DBE subcontractors for quotes for the job. While these contacts may be informal, such as by telephone conversation or facsimile transmission, the subcontractor is made aware that it is being contacted for the quote in reference to the DBE goal for the proposed project. In this case, Hubbard contacted CDS Trucking for a DBE subcontractor quote. Petitioner has used CDS Trucking numerous times in the past to perform services and on each such occasion CDS Trucking has been identified and accepted as a DBE. CDS Trucking gave Hubbard a quote of $30,000.00 to perform asphalt hauling services on the subject project. Taken in total with the other four DBEs who gave quotes to Hubbard, the total proposed DBE participation on Petitioner's bid was 10.65 percent. This amount exceeded the Department's stated goal for the project. Without including CDS Trucking, Hubbard's bid did not meet the 10 percent DBE goal. Under the Department's policy, in order to be eligible for inclusion as a DBE, a subcontractor must be listed in a DBE directory published each month by the Department. To be included in the directory a subcontractor must be a certified DBE as determined by the Department's minority programs office, must be in the process of seeking DBE certification renewal by having applied for such renewal not later than 90 days prior to certification expiration, or be certified on the date the directory list is closed for the month. Additionally, the Department will allow a contractor to use a DBE firm that is certified subsequent to the printing of the DBE directory, if such company is certified prior to the submission of bids. Under the foregoing policy, it is not unusual for the DBE directory to include numerous subcontractors who are, in fact, noncertified DBEs at the time of the bid letting or award. Consequently, a contractor using a noncertified DBE may qualify for, and receive, a contract award simply because it used a subcontractor listed in the DBE directory. Conversely, the use of a subcontractor who is not included in the DBE directory but is, in fact, a certifiable DBE may result in the contractor's bid being deemed nonresponsive for not meeting the DBE goal. Pertinent to this case, CDS Trucking has been identified and certified as a DBE since 1985. During that time there have been two lapses in DBE's certification status. Both lapses were voluntary in the sense that CDS Trucking, through its own conduct, intentionally failed to renew its certification. In the first instance, the company was undergoing internal organizational changes that delayed the application process. In the second case, Mrs. Cantero, the office manager and person responsible for the recertification application, was out of the office ill for an extended period of time. During these occasions, CDS Trucking knew its certification as a DBE would be suspended until completion of the renewal applications. CDS Trucking has never been denied DBE certification. The factual circumstances giving rise to CDS Trucking's initial eligibility and certification as a DBE and its current status have not changed. The DBE certification held by CDS Trucking for the 1991/92 year expired on March 13, 1992. On February 7, 1992, CDS Trucking filed an application for DBE recertification. Had the Department acted on that application within 90 days of its filing, CDS Trucking would have been recertified as a DBE on or before May 7, 1992. At the time the application for recertification was filed, CDS Trucking had submitted all information required by law or rule as set forth on the application form. No additional information from the applicant was required by law or rule in order for the Department to act on the application. Instead of processing the application within 90 days, the Department requested copies of two contracts recently executed by the applicant. The form letter issued by the Department provided: "Your application is presently under review. In order to complete this review, please submit the following additional information." (emphasis added) Such letter incorrectly suggested to CDS Trucking that if it did not furnish the information, its application would not be completed. On March 24, 1992, CDS Trucking responded to the request and submitted the additional information which it thought was required to complete its application. Because it had requested additional information, the Department extended the time within which to act on CDS Trucking's application for recertification. Since the Department's request for such information was made on the last possible date to make such request, the time to act on the application, under the Department's interpretation, was extended the maximum length of time. More important to this case, however, is the fact that the Department had no basis, in law or fact, to seek additional information from CDS Trucking. Moreover, had CDS Trucking filed its application for recertification prior to 90 days before the expiration of its certificate, the Department would have left CDS Trucking on the DBE roster regardless of the length of time necessary to process its renewal, including any delays created by the Department's requests for additional information. The Department does not have a rule that requires DBE applicants for recertification to file for renewal not later than 90 days prior to expiration of their certifications. The DBE directory used for this bid letting included the names of many DBE subcontractors whose certifications had expired before April 8, 1992, the date of printing for the directory. An even larger number of DBE subcontractors whose certifications expired before May 27, 1992, were included in the DBE directory used for this bid letting. One of the DBE subcontractors used by an unsuccessful bidder on this project (whose bid the Department did not deem nonresponsive) had a certification that had expired on June 12, 1988. At the time it gave Hubbard the quote for this project, CDS Trucking believed it was operating as a DBE. Since CDS Trucking had supplied all requested information to the Department and had a history of certification, no reasonable basis existed to presume CDS Trucking was not a bona fide DBE. CDS Trucking, by giving a quote to Petitioner, represented itself as a DBE to Hubbard. Hubbard relied on the quote from CDS Trucking and presumed it to be a DBE. As such, Hubbard further presumed it had met the DBE requirement for this project and, consequently, did not believe it needed to make an additional good faith showing. Indeed, had the Department followed its applicable rules, CDS Trucking would have been certified on the date of the letting, May 27, 1992. Had Hubbard known CDS Trucking was not certified on May 27, 1992, other arrangements could have been made. The Department arbitrarily rejected Hubbard's bid and refused to look at the facts and extenuating circumstances regarding CDS Trucking and the Department's own failure to timely process the DBE's renewal application. The fact that CDS Trucking, because of the Department's own failure to timely issue the recertification, was not certified on the date of letting is a minor irregularity in that CDS Trucking was certified on the date of the award and clearly was eligible for certification at all times. More important, the inclusion of CDS Trucking as a DBE does not convey an improper advantage on Hubbard not enjoyed by the other bidders. The Department failed to consider any of the factual matters related to CDS Trucking when it determined Hubbard's bid to be nonresponsive for its alleged failure to meet the DBE project goal. In fact, when the fact that CDS Trucking should have been certified by the Department on May 27, 1992 is considered, Hubbard's bid for this project did and does meet the DBE project goal.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department of Transportation enter a final order finding Hubbard Construction Company's bid responsive, and awarding contract no. 11130-3518 to Hubbard Construction Company. DONE and ENTERED this 21st day of October, 1992, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of October, 1992. APPENDIX TO CASE NO. 92-4018 RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE PETITIONER: 1. Paragraphs 1 through 33, 36, 38, 41, 43, 47, 48, 51, and 55 are accepted. 2. Except as specifically addressed in the foregoing findings of fact, all remaining paragraphs are rejected as hearsay, argument, presuming facts not in evidence, contrary to the weight of the evidence or misstatement of the record, irrelevant, or repetitive. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE RESPONDENT: 1. Paragraphs 1 through 5, 8, 11, 14, 15, 16, 17, 18, 19, 20, 22, 24, 29, 31, 32, 36, 38, 45, 46, 47, 48, 50, 51, 52, 53, 54, 55, 57, and 59 are accepted. 2. Except as specifically addressed in the foregoing findings of fact, all remaining paragraphs are rejected as incorrect or incomplete references of fact, recitation of testimony not accepted as ultimate fact, argument, irrelevant, contrary to the weight of the total evidence, or inapplicable as a matter of law and therefore immaterial. COPIES FURNISHED: Susan P. Stephens Asst. General Counsel Dept. of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 F. Alan Cummings, Esquire Mary Piccard, Esquire P.O. Box 589 Tallahassee, Florida 32302-0589 Ben G. Watts, Secretary Attn: Eleanor F. Turner Department of Transportation 605 Suwannee Street, MS 58 Tallahassee, Florida 32399 0458 Thornton J. Williams, Esquire General Counsel Department of Transportation 605 Suwannee Street, MS 58 Tallahassee, Florida 32399 0458
